It is hard, very hard, to find someone that does not owe any debt, either big or small. So, debt is not a crime, and can be a viable choice to building a long term financial wealth. In fact, some people have gained financial freedom through borrowing, either to finance business or buy over time for something in the waiting. Whichever the case, debt is normal and part of financial programme.
Unfortunately, some people have also gone to the great beyond as result of debt and inability to confront it.
In some cases, they worsen their financial state as result of involvement in debt. But whatever may be the case, the best way to get out of debt and remain financially stable is to face it and resolve it.
Experts preach confrontation of the debt, and like Jim Collins in one of his books it is described as “Confrontation of brutal facts.”
What do I mean? Look at the debt by the face and set a plan for repayment.
Set up a monthly repayment plan and ensure you keep to it despite the pressure to spend on other things. But if its health issue, tackle it first and see if you close the gap in the next months ahead.
Do not allow your debt to steal away your credibility. Always ensure you keep in touch with you creditor, taking time to explain to him the efforts you are making to repay back.
Would you for any reason disappoint your debtor on the date of repayment, do not give him the chance to remind you, walk up to him or put a call across before the due date to explain why you will be unable to meet up, and try to give him a new date. But ensure, you must keep that date as disappointing him the second time would erode your credibility.
If you are overwhelmed by the debt that you can no longer meet up, rather than running away, meet your creditor for debt rescheduling, and by that he will understand you better and also appreciate your interest to make progress with the repayment.
If it gets to where you cannot pay back, rather than running to hide, come out and plead for mercy, as he may vent his anger catching you afterwards.
For Daniel Pontarelli, building an adult life meant piling on the debt
Since graduating from college in 2010, the 24-year-old has taken on a loan for a new car and is helping his wife pay off around $20,000 in student loans. He took out a $154,000 mortgage to buy a home and put $4,000 on store credit cards to furnish it.
Though Pontarelli says he has been careful to get the best interest rates possible, he has had to develop a system for managing his new debt load. “It took getting organized just to relieve some of the pressure,” says Pontarelli, who lives in Overland Park, Kansas, and works at a financial-advisory firm.
Young adults are racking up record amounts of debt. Students are taking out bigger-than-ever loans to pay for college, and then freely using credit cards to cover the extras they can’t afford to buy outright. For many, this leads to a spiral of debt that will follow them for years. But there are ways to reduce your debt load—and even catch a break for being a young person.
First, ask yourself if it’s even feasible to pay off your debt. If your payments are big but manageable with your income and other expenses, you’ll want to focus on cutting back and consistently paying down as much as possible.
Pontarelli and his wife tracked their expenses and saw where they had room to divert money to debt payments. A big culprit was vacation. They still went away this year, but didn’t splurge on extras.
They enrolled in automatic payments for all of their loans and credit cards. A number of the lenders who financed his wife’s college loan gave them a small interest-rate cut for doing so.